Ladies and gentlemen, good day, and welcome to the H.G. Infra Engineering Limited Q4 FY 2023 earnings conference call, hosted by Go India Advisors. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity to ask questions after the presentation concludes. To assist during the conference call, please signal an operator by pressing star, then zero on your telephone . Please note that this conference is being recorded. I now hand the conference over to Ms. Sana Kapoor from Go India Advisors. Thank you, and over to you, ma'am.
Thank you, Farzan. Good afternoon, everybody, and welcome to H.G. Infra Engineering Limited earnings call to discuss the Q4 and FY 2023 results. We have on the call Mr. Harendra Singh, Chairman and Managing Director, Mr. Arvind Khandelwal, President, Strategy, and Mr. Rajeev Mishra, Chief Financial Officer. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces. May I now request Mr. Harendra Singh to take us through the company's business outlook and performance, subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir.
Thank you, Sana. Good afternoon, ladies and gentlemen. Welcome everyone to the Q4 and FY 23 earnings call. I hope you all are well and have got the chance to view the investor presentation and the results that were uploaded on the exchanges. I'm pleased to announce that with the grace of God, this year has been phenomenal for us, right from diversification of our order book by securing three non-road projects this year, followed by successfully entering into a share purchase agreement for monetization of our core HAM projects, which would further strengthen our balance sheet. Furthermore, we have strengthened our position in the highway and road sector with the two successful HAM projects in Q4 FY 23. The company has established outstanding performance in FY 23 across all areas. Let me start with the yearly financial performance of the company.
In FY 2023, the standalone overall revenue was INR 44,419 crore, which increased by 22.2% year-over-year, YOY, from INR 33,615 crore in FY 2022. The EBITDA for FY 2023 was INR 710 crore, showing a year-over-year growth of 21.5% with an EBITDA margin of 13.1%. The PAT margin for FY 2023 was 9.5%, and the profit after tax for the period FY 2023 is INR 422 crore, which is an increase from rupees 339 crore, FY 2022. Before I move on to the operational and the detailed financial numbers of the company, let me share a few updates on the infrastructure sector to establish the business opportunities in the years to come.
Talking of roads, the central government intends to accelerate the construction of roads in FY 2024, with awarding of new projects of 12,000-12,500-odd km this year, along with focus on the project completion ahead of general election is expected to boost execution in FY 2024. Road target to build 45 km of roadway the year, each day of FY 2024, is implying construction of around 16,000 km of road in a year, which will be our record high. MoRTH plans to initiate the second phase of Bharatmala Pariyojana soon. Railways, again, the capital expenditure in the railway sector has been consistently increasing over the past four years and is expected to reach a projected amount of INR 250,000 crore in FY 2023.
The government aiming to upgrade the redevelopment of 1,235 odd stations primarily to the EPC mode under the Amrit Bharat scheme. The government has allocated a budget of INR 98,000 crore for the modernization and expansion of airports over the next 5 years. Of this budget, INR 60,000 crore will be used to enhance the existing airports, while INR 38,000 crore has been set aside for the development of new greenfield airports. The world's fastest growing aviation market aims to boost the number of airports to 220 by 2025 from the current 148. It involves greenfield projects, new terminals, and makeover of the existing airports. The water, again, where the Jal Jeevan Mission is quite impressive.
With increased budgetary allocation, the priority has, the priority being quoted by the government of India to provide safe drinking water to the rural households. We as a company see abundant business opportunities to harvest the same and look forward to get some more projects in this front too. Now, I will like to share the operational updates on order book, project execution, and other significant events. As of FY 2023, our order book has reached to INR 12,595 crore. There is a bit correction in the investor presentation. We have corrected because there are two projects which was having the BFSI, say, correction. So it is INR 12,595 crore, with an order inflow of INR 8,650 crore during the year.
We have established our footprint in 11 states, with the EPC segment accounting for 55% and the HAM segment accounting for 45%. We would further like to grow our order book in this financial year, majorly from roads and highways segment, but we would like to further extend our presence in other sectors, too, including water, railways, and other opportunities.... During the year, we have secured three HAM projects and three non-road projects, which I would like to mention, apart from the Ganga Expressway project of Adani. The Karnal Ring Road project, that is a HAM project in the state of Haryana, worth INR 997 crore. Two HAM projects in Varanasi, Ranchi, Kolkata Highway, that is package 13 and 10 in the state of Jharkhand, worth INR 925 crore and INR 1,303 crore, respectively.
Delhi Metro, DMRC EPC project valued at INR 412 crore, that is inclusive of EPC. RVNL, new railway line project in Bilaspur, that is in Himachal Pradesh, that is INR 466 crore. That is again, inclusive of EPC, GST, sorry. Now, Central Railway has awarded new project of Kanpur railway station in the state of Uttar Pradesh, that is INR 635 crore. That includes GST. I will now touch upon the progress of ongoing projects. Talking of EPC projects, with regards to Ganga Expressway, we have executed the project around 12.9%. The Urban Extension Road Project, that is the Karala-Kanjhawala project in Delhi, execution is around 53%. The Neemrana-Dhaula project, that is EPC NHAI, the execution stood at 8.4%.
The execution progress of Mancherial-Repallewada project is at 94.14%, where we have already received the PCOD in the month of December. DV package nine, execution progress stood at 97.4%. We have already applied for PCOD very, very recently. HAM projects, where the execution stage, the Raipur-Visakhapatnam, OD package five and package six, are at 33.4% and at 38.3%, respectively. They are moving quite well as per the schedule. Execution status of Raipur-Visakhapatnam, OD one package is 38.8%. The execution status of Khammam-Devarapalli, package one and two, is 6% and 15%, respectively. The Rewari Bypass Project, package four, is on with already 34% completion. We already applied the PCOD. We have received certain completion certificate during the year.
Well, we received the completion certificate for NHAI DV package 8 , DV package 4, IRB Hapur-Moradabad project, Adani Road Transport project , and two small Rajasthan EPC projects, namely the Sojat-Jhadol and Bhavi-Khimsar. There's one very significant milestone which we just reached, that is monetization of four projects. These past few months, we were continuously under discussion with the pro- with several investors to monetize our initial four HAM projects, that is Gurgaon-Sohna, Rewari-Ateli, Ateli-Narnaul, and Rewari Bypass . It's a pleasure to inform you that finally, we have signed share purchase agreement with Highways Infrastructure Trust, which is supported by KKR, in the first week of May only, where HG will be selling 100% stake in all these four wholly subsidiaries.
The enterprise value for the transaction is INR 1,394 crore, having an equity value of INR 561 crore. The valuation of the deal is around 1.5x the price to book, which is higher than 1.3-1.4x expected and guided by the management earlier. Equity and debt commitments for all four HAM assets are at INR 343 crore and INR 996 crore, respectively. The entire transaction will be completed in two tranches, where one tranche will include three initial HAM projects, where we already have achieved the completion. The second tranche will include Rewari Bypass project, for which final completion approval is expected by September.
Completion of the sale of the asset is expected to close first tranche, which will happen after the satisfaction of the conditions precedent set out in the share purchase agreement, which includes authority, third party, and other regulatory approvals, and certain contractual commitments. We believe this deal at a strong valuation will be going to strengthen the balance sheet of the company and will help the company to re-release capital for future growth. Diversification of order book, along with monetization of HAM projects, can give more positive triggers for the company in future. Now, I'd like to invite Rajeev Mishra, CFO, to highlight the quarter and last year's financial performance of the company.
Thank you, sir. Let me give you the key updates on the financials. In FY 2023, the standalone overall revenue was INR 4,419 crore, which increased by 22.2% year-on-year growth from INR 3,615 crore in FY 2022. At consolidated level, the revenue was INR 4,622 crore as compared to INR 3,731 in FY 2022, with year-on-year growth of 23.2%. At consolidated level, EBITDA for FY 2023 was INR 710 crore, with Y-o-Y growth of 21.5% against fifty... And, at consolidated level, the EBITDA was INR 800 crore versus year, with year-on-year growth of 22.1%.
The tax margins for FY 2023 at standalone level was 9.5%, and the tax for the period FY 2023 was INR 421 crore, whereas INR 339 crore in FY 2022. At consolidated level, the tax was INR 493 crore versus INR 380 crore in FY 2022, with Y-o-Y growth of 29.8%. On the standalone basis, the gross debt of the company was INR 504 crore, which included working capital debt of INR 38 crore, term loan and current maturity and the trade limits of INR 368 crore and NCD of 97 crore. At the consolidated level, the gross debt was INR 1,907 crore, which included the project debt of INR 1,403 crore.
The company continues to remain and maintain its order book ratio of 2.9x. For all the 12 HAM projects, the total equity requirement anticipated in FY 2026 stood at roughly INR 1,612 crore. Out of this, an investment of INR 736 crore has been done as on March 2023, and a projection of invest we, further projects of INR 440 crore is anticipated in this remaining financial year, FY 2024. Coming to the quarterly financial performance, on standalone basis, in quarter four, the company achieved a standalone top line of INR 1,470 crore vis-à-vis INR 1,026 crore. In terms of the EBITDA, the company achieved INR 238 crore, with an EBITDA margin of 16.2% for the said quarter.
The profit out of before tax, for Q2 FY 2023 amounted to INR 200 crore, representing a growth of 64.8% year-over-year. The PAT also rose to INR 100 crore, indicating a year-over-year growth of 62.1%. On the console basis, the company has achieved a revenue of INR 1,535 crore compared to Q4 of last year. Regarding the EBITDA, the company recorded INR 297 crore, with an EBITDA margin of 19.3%. Furthermore, the profit before tax for Q4 FY 2023 is INR 231 crore, and PAT also experienced a year-over-year increase of INR 117 crore, reflecting a growth of 64.4%.
We are happy to share that the company's performance over the last 5 years has been exceptionally good, with a five-year CAGR for revenue of 26%, EBITDA touching to 28%, and PAT at 30%. The ROCE and ROE increased to 30% and 24% respectively. The company has worked dedicated to reach the net working capital cycle to 23 days in FY 2023, as compared to 46 days in FY 2019. I would like to hand over the call to Mr. Harendra Singh for further future, future guidance and the business opportunities.
Thank you, Rajiv. Let me enlighten the forums of the way ahead. Rajiv has laid the groundwork for its expansion phase by emphasizing operational efficiency and effectiveness, cost optimization, and timely budget execution. The company anticipates securing orders worth INR 8,000 crore-INR 9,000 crore in FY 2024 to maintain the book-to-bill ratio of more than 2.5x. Furthermore, there is a strong NHAI bid of around INR 110,000 crore, which is in pipeline this year. In other sectors, the new projects in railways, say, we can expect of INR 15,000 crore to be bid, where we already target for in that show, and they are all yet to be bidded, so which gives us a huge opportunity, opportunity to scale our business in order book, order book.
We continue to stress the significance of diversification, and as evidenced by our recent order wins for 3 non-road projects, we aim to have 20%-25% of our order book comprising non-road projects within the next 2-3 years. The floor is now open for question answer. Thank you.
Thank you very much. We can now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Hi, good evening, sir, and congratulations on a consistent performance and a very, very strong track record. So my question is, sir, on the guidance for FY 2024, can you please provide what you expect in revenue, revenue and margin for FY 2024 and the order inflow?
Order inflow already we, I have just touched upon. We are expecting about INR 8,000-9,000 crore of order, which again, I can intuitively, I can just break it out. We have INR 5,000 odd crore of HAM projects, which intuitively we'll be targeting to look upon this year. About INR 1,500 odd crore of EPC projects from NHAI or other, and the final projects only. Talk about, say, INR 2,000 odd crore likely to, we are targeting for the other than those sectors. As far as execution is concerned, I can just go into the breakup of the total orders in hand. We have already seen under execution orders are five HAM projects, majorly five HAM projects.
It's INR 3,000 crore of order, out of which we are expecting to execute 1,800 crore during the year. But the NHAI EPC projects are majorly two. One is a Delhi UER II project, and the second is Nelamangala-Tumakuru project, where we expect that during the year we would be doing INR 850 odd crore of execution. The Sangli-Borgaon project around we are expecting some INR 2,000 crore of execution, where it's around INR 3,900 odd crore of annual work in there. This INR 400 crore of execution we are expecting from three of the rail non-highway projects, railway or station project like that. INR 100 odd crore of execution is expected from other small good leftover work.
Sticking together, it's coming around, say, about 20%-22%, say, year-on-year, rather 23%.
... Sir, a question on the monetization. If I remember correctly, I think, you are getting INR 5.3 trillion, INR 530 crore from an investment of around INR 300 crore. Is the number right?
It's INR 343 crore, to be very specific.
Okay. Understood, sir. Just for the changing of road for FY 2023, I think was slightly on the lower side. However, the HAM portion might be much higher. You did mention that 1.1 trillion in order is in the pipeline. Is this tender as of now open for bidding, in the sense of opening, and expect this number to increase as the complete FY 2024? And why the HAM proportion in this pipeline?
What you are talking, I think you are talking of the bidding pipeline of NHAI.
Yes. Yes.
Indicated as already being given as a guidance from NHAI and ministry, that they are all looking for awarding this much of size of orders. They're almost about 4,500-5,000 km from NHAI, and balance is on board.
My question was, is 1.13 number looks to be slightly on the lower side for the industry.
I could look at what you want to keep it, please?
No, no, no. My question was, is this INR 1.1 trillion number, is it, is it... I think it's on the lower side, right? We used to do INR 1.5, INR 1.6 trillion.
No, no. Okay. What actually we have estimated as is what we would be aiming upon to. We are not considering those projects for where we actually as well geographically, we would not be interested for.
I understand.
Last year we all bidded for almost INR 72,000 crore of orders, so all bids from NHAI. This year we are looking at about INR 110,000 crore to be bid for all NHAI projects.
Understood, sir. Thank you and all the best. Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per person. Should you have a follow-up question, we would request you to rejoin the question queue. Participants, to ask a question, you may press star and one. The next question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Yeah, hi, Rishitji, congratulations on the team and exceptional year.
Parikshit Kandpal, the audio is muffled from your line. Please use the handset mode.
Hello. Is it better now?
Yeah, yeah.
Yes, I was saying congratulations on the monetization of the four HAM assets, and an exceptional year in terms of execution. So my first question is, on the diversification. So we got three projects this year on railways and metro. So did we bid for any water project? Because a lot of our competitors have got water projects, and we have been planning, strategizing to bid for water projects. If you can just enlighten us that how much was the bid we have put in the water segment in FY 2023, and what are the plans for FY 2024?
Thank you very much for your good wishes, Parikshit. This year we bid for 5 water projects for water. 3 in Rajasthan, state of Rajasthan, 2 are in the state of MP. Definitely we could not win any of the projects because our estimation, which we actually have calculated, we stood about 1.2-1.5 range. So there are. It's not that we are not pursuing this particular opportunity. This is a, there is a huge potential in this particular nearby states like MP and even UP and Rajasthan. Rajasthan, of course, there were many bidding, say, bids were about to be bidded or awarded.
But of late, I think very recently it has been decided they will be awarded, say, in the subsequent part of this financial year, so I think post election. So we are keeping a very, say, watch on this particular bidding opportunity, and we will be doing so.
Okay. The second question is on the HAM portfolio. In terms of out of 12 HAM assets, 4 has been monetized. The balance 8 HAM assets, do you have any kind of understanding with who can, the, in future, whether they'll have a ROFO on our assets, or we retain the option of, like, exploring it out with other partners as well? So how is the strategy working out there in terms of future monetization in the portfolio?
See, the understanding has been very clear. Ultimately, it has to be a good association from any of your parts. They are having the backup of their fund management, and we are having the backup, our DNA of our EPC. This is our understanding, where we are actually looking beyond that, you know, after four HAM assets. They told that if we want to, whatever we continue to develop our con, for such, we would be looking at, but definitely it all depends upon the technical due diligence, other due diligence, structure, which really better where the valuation is also there. We believe that this is a strong relationship, this is going to be continue in future.
Okay. And do you think to extend this relationship beyond road, like maybe PV or power sector, and then kind of... This is actually the
But very recently it has been included for the highway, but they have shown the interest in the company that we can look and look beyond even wherever you would be interested in other sector other than the private sector even. But I cannot comment right now.
Okay. Thank you. And just the last question to Rajiv. Rajiv Sir, if you can give breakup of, so out of the 12 HAM projects, 4 is already invested, which is already done?... balance 8 projects, what is the total investment in equity? What is the balance requirement over the next, till FY 2026, year-wise, if you can give us?
The total requirement of all these projects in the equity was INR 16,920, out of which we have invested, sorry, INR 735 we have invested in till March. Out of these projects, almost INR 440, we have to invest in this FY 2024. For the remaining, we have already considered the positions through INR 359, which is required in FY 2025 for the remaining projects, which are all at the execution in projects.
So you said INR 440 crore in FY 2024 and INR 359 crore in FY 2025?
That is required.
Okay, 359 in FY 2025, 440 in FY 2024, and balance in FY 2026, right?
76 odd crores.
INR 76 odd crore. Okay, sir, thank you, and wish you all the best. And again, congratulations on the great deal which you have closed. Thank you.
Thank you. Reminder to the participants, anyone who wishes to ask a question, you press star and one. Next question is from the line of Jiten Rushi from Axis Capital. Please go ahead.
Good evening, sir. Thank you for my question and, congratulations on the good set of numbers and results of the week. Sir, my question is on the project of, this, Khammam-Devarapalli package one and two. So this quarter in Q4, we haven't seen any execution. And also, the Tumakuru project also, we saw a significant delay execution. So any reason what is happening on these three projects, sir?
Sure. I think in, you're talking of Khammam Devarapalli package 1 and 2.
One and two.
Yes, sir. The execution in Q4 of this particular is around INR 21 crore and INR 48 crore respectively in 21 and 2. This is again, because in this project there has been quite a big variation, which is actually an encounter because of canal irrigation department, they are asking for. Almost 50% of the land has got affected. Because of that, we have a certain approval is likely to come from NHAI, whether they are going for this variation or not. This is why I think the execution has been at a slower pace, but I don't believe that it is going to have the effect for much more time. This is going to be resolved very soon, and we would be taking back to the normal trend of this milestone, which you will be looking at.
In Nelamangala, Nelamangala Tumakuru also, there has been a small variation, which is likely to be there with the... Because it is in two phases, where the first service road being constructed for the first phase, and the second phase is 18 months, is the main carriage way to be constructed. So the in service road and main carriage way, they are looking at the combination, where whatever we complete in the service road, it can be finally started. Because there is certain, there's approval which is likely to come from NHAI.
Sir, in KD, one and two, you said that the variation approval will come from the variation, variation, variation will be on the higher side?
Yes, on the higher side, there are two kind of variation. One is the usage of fly ash. In this particular, where the NTPC has already been called, already called the bids and invited the tenders for transportation of fly ash, and we also built into that as we have built for Mancherial project. But, for sure, I think all the variations are on positive side, it's not on negative.
When can we expect as to the variation to pick up in the KD 1 ?
Variation is already on. It's not that variation is not going on at all. It's a standard scale. Everything is going on, moving on well on the, as per the milestones, we will be achieving them.
This 21-point margin will actually enhance the revenue?
No, no, no. Total, total bill revenue, which is during the year, because we didn't. It's all bill revenue, this 21.8 times 48.6.
Sir, this, even this, Tumakuru also should, as you said, positively, as you said, the variation will be mentioned.
Yeah. Yeah.
Okay. Okay, and sir, on the EBITDA, this cost margin, we are seeing significant improvement. So any, any reason for this improvement, this quarter? Or it was because of the normal-
It's a normal trend. It's not that anything which is, actually has added into this, margin. It's a very small, where you can see the, range of, where employee cost and the cost of material being used. So the OPM has increased. OPM being increased, so the EBITDA has showed the improvement that is why.
The margin guidance remains at what, 15%? What is your view?
Sorry.
The EBITDA margin guidance for going, for next couple of years?
Yes. Typically, as we expect that out of these projects, which we already started the execution and, and we would be starting the execution, but roughly it will run out around the range of 16%.
16%. So going forward, we can see some decline in margin because of the mix, engine mix.
Inline, no, I'm saying 16%.
16%. Okay, got you, sir. In some cases, you have done a significant success this year. But, we can highlight almost the profit, the profit is almost INR 50 crore, right? Any success view on going forward?
Yeah, I think you can see the increase in the term loan because of that only, the position of INR 222 crores term loan being added during the year. So the closing balance is INR 333 crores of term loan. There is hardly any increase in the OD limits and LCs, et cetera. Because this has been increased, because we have added INR 299 crores of gross block, which is majority of that portion is the construction equipment which we added. So we are the phasing out of the old construction equipment, where they already there is some life which we are considered as a for the and the technology accreditation of all the equipment that is being done strategically....
The year on now, just looking into the subsequent years, we would be happy enough that if the order is for any of the ordering distribution of 20% growth for the company, it should be somewhere around 100 or more will be added for next three years.
Okay, sir, I have more questions. I'll come back and tell you. Thank you.
Thank you.
Thank you. For participants to ask a question, you may press Star and one. The next question is from the line of Shravan Shah from Dolat Capital. Please go ahead.
Thank you. Congratulations on the robust performance and on the monetization of HAM projects. Sir, broader questions has been answered. A couple of things just to understand first, please, on the have we bid any any of the projects where where bid is yet to be open?
Yeah, there are bids where the results are yet to be open. There are two projects of Shamli, okay, and one more of NHAI project, or rather, one more of more projects, and three projects of railway, which yet to be opened.
So these six projects is worth how much, and railway three projects?
Altogether is about INR 8,000 crore, all six, seven HAM projects, and railway projects are a small amount of INR 300-500 crore. Totally INR 8,000 crore.
Okay. Okay. Got it. Second is, on the recently won projects, three HAM projects and Kanpur Central Railway and Bhanupali-Bilaspur, in terms of the contract rate, what is the expected deadline?
Right. RVNL for this Bilaspur project, they have already, has assigned the Appointed Date of 24th of May, so they released the letter. So this will be on 24th of May. So tomorrow we are signing the agreement, and, this is how I think for, Kanpur station, of course, sir, I think this is going to delay a little, not, not more, but at least two, three months, because it will take all from, possible, say, commissions from the nearby authority, where we majorly utilize the single access to the city.
Okay. So maybe by July, August, we will get the contract for Kanpur Central Railway Station?
Probably, as of now.
Sorry?
Yeah, as of now, I think like that only, August.
For three HAM projects, Karnal and Varanasi, Package 10 and 13.
See, for Karnal, the land availability as of now is around 90%, and the crop which was sown there, now being harvested, the wheat crop, and we are taking the position of the land. As soon as we complete the land position, by June end, we believe that definitely by June end or not by July, we will be taking the contract at this point of time.
For Varanasi, Package 10 and 13, October, November or December?
Yeah, of course, I think this is post-monsoon only in any case, because the land compensation is being freeloaders. We believe that it is significantly going to improve once this harvesting has already been done. By October, November, we believe that luckily there is a chance where aggregated like we declared.
Okay. Just a couple of data points in terms of the retention money, mobilization advance, and unbilled revenue as on March.
Right. Unbilled revenue, which is your last point, which has been increased for this financial year because those two, three major developments have been there. There's a variation in market approved, if you are talking of the unbilled revenue, which is now INR 600 crore-something to INR 610 crore, the other are very specific. This is how INR 160 crore odd is in HAM only.
Okay.
Uh, then-
So, reach?
It is around 170 odd rupees, which is, until in UER and delivery of assets, 8 and 9. And running project also, now the, change is there. We have the next phase, almost, 170 odd rupees or unbilled is there. But now, there's a variation being, passed, where the asset construction, which was at a different stage, now they relaxed the payment at not at every 2 meters, now they have relaxed the payment. So that is how I think, within this, quarter only, we would be getting a significant degree in the unbilled, because they will be paying us, right on the, not at that stage, prior to that stage.
Sorry, sir, just to clarify, unbilled revenue total is INR 610 crore. Retention money, how much? And mobilization advance.
INR 580 crore, to be very specific.
Okay.
Out of INR 580 crore, I have given that the HAM project is around INR 150 crore. NHAI project is INR 165 crore odd. One major amount is there by the, with the, NHAI, Gagariya project , which is INR 170 crore, where it is going to be reduced drastically down because they have now relaxed the stage payment for all the three, contractors, like we and, Patel and IRB or ITD.
Okay. And, retention money and mobilization advance, sir?
Retention money total for debtor balances, what we are talking is what is the debtor balance?
No, sir, as on December, it was INR 190-odd crore retention money. So, what's the figure for March?
No, I think better is INR 735, and INR 111 crore is retention.
... We request you to return to the question queue for follow-up questions. Thank you. We'll take the next question from the line of Prem Khurana from Anand Rathi. Please go ahead.
Yes, thank you for taking my question, sir, and congratulations on closing the transaction for four HAMs, and that would have to be good valuation. So just, I mean, I read in your remarks, and you said, you're looking—Yeah, sure. Am I audible now?
Yeah.
I think, initially, I mean, in reply to one of the questions, I mean, you said you are expecting some number from INR 1,800 crore from five hybrid annual TVs of INR 3,000 crore of balance potential, and you gave us a breakup of some of these other projects. What I realize is, I mean, eventually, you have not considered any contribution from these three hybrids that you've secured recently. Why would that be the case? I mean, because, I mean, just now you said, I mean, you would be able to have ADs in place.
I think I, you know, just focused about it, but INR 500 crore of acquisition here are taken from these HAM projects, so nearly awarded HAM projects, INR 500 crore.
Oh, okay. Sure. Which essentially would imply that you're looking at more than 23% kind of growth here, I mean, on a YoY basis.
Around 23%, that's it.
Oh, okay. Sure, sure, sir. Thank you. That's alright. Second question was, I mean, if you could talk about competitive intensity, why the intensity is essentially high, instead, I mean, you bid for almost INR 70,000 crore rupee projects in FY 2023 on NHAI side, but we could have only three projects worth around INR 3,000 crore rupees, which is even less than 5% conversion ratio. So how do you see the conversion ratio kind of work for us? I mean, in FY 2024, I mean, we're looking at around INR 5,000 crore rupees of orders on hybrid and 1,500 odd on EPC from NHAI. Do you see competitive intensity to go down now, or, I mean, it'll remain there, and you would have to wait for more to be able to get enough projects?
Well, we believe that, I think, with the new compulsion or BBB company, they would be only allowed to bid for HAM project. That is, where... And there are many projects which for many companies, other mega companies, they are having those projects where the, okay, certain amount of acquisition has to be done. So we believe that way, I think, now always we have seen the trend of about 5-7 bidders, earlier, about 10-12 bidders in all the HAM projects. But if you see, for sure, we are putting our finger first, but we are expecting that at least some thousands of INR there are goals from, it can be from, even Maharashtra State Road Corporation, where they have also called certain EPC projects.
So we are looking at those projects as well, from EPC lines, from not only NHAI, more from state projects as well, especially Maharashtra.
Sure, sir. Sure, I think that answers my question. I'll come back to you for more. Thank you, and all the very best for future.
Sure.
Thank you. To ask a question, you may press star and one. The next question is from the line of Nikhil Abhyankar from ICICI Securities. Please go ahead. Mr. Abhyankar, your line is in talk mode. Please go ahead with your question.
Yeah. Harendra, sir, on a good set of numbers, I have two questions. So first is on the margin. So, is it the case that you have given the margin guidance conservatively, given the cost prices are coming down, input prices are coming down? So is there any chance as we go along the year, you might, our operating margins might surprise us on the upside?
I think that whatever you are saying, the price escalation clause is, either way, A, it's positive or negative. If the prices are going down, then definitely the price escalation, which we would be getting, could be even too, yeah. So earlier, what has happened is because of the steep rise in commodity of steel, even especially steel and crude. So it has happened where the dip in the margins, which we have seen the past one and a half years. But now it is almost I believe that 16% or 16.25%, that is a decent range, which we'll be looking upon for our all under execution projects.
Okay. Sir, the other question is on last week there was a lot of talk about government reducing the grants to 20%. So is there any word on that from the ministry?
No, as of now, I think they have not given any signal that is going to be reduced, but they have actually touched upon the lenders as well as professionals interest across, and this entire fraternity of how it may look like. They'd always give positive response. Definitely, it is going to cool down the margin, this competition. So that is how we believe. I think nothing has happened as of now. There was first clause, and second was network criteria. So nothing has happened as of now.
Are we pushing from our end to bring the grants down so that-
There are, like, various series of meetings and discussions where they and we together at the NHAI forum, where the National Highway Builders Federation. They are all looking to have a conducive arrangement or where the project is done with quality, with standards, within the timeline, and that is their intention also, and we also are looking into that. So, but, I don't know how this, how long it is going to take.
Okay, sir. Thanks a lot, and all the best. Okay.
Thank you. Ladies and gentlemen, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. Next question is from the line of Anupam Gupta from IIFL. Please go ahead.
Good afternoon, sir. Just have a couple of questions. Firstly, INR 5,000 crore of inflow from the sale of 4 projects, and 1, 2 going to the balance sheet. Should we comment this year about?
Yeah, of course, this year only, since we have executed already this escaping time. Now we are going to have the complex of the compilation and completion of the completion precedent, where for three, three projects which we already have completed. We would be applying to NHAI for getting the NOC from them. The usual process that they take normally takes almost two, two and a half months or back. One is the NOC from all the lenders there also, that is what is required. There are certain obligations from either side of the body. Then again, by September, we believe that this all three tranche for these three projects, where the fund can, we believe that should be, transferred to our account.
Followed by this Diwali package, we are six months as well requirement of from the completion date, so the provisional completion date. So once we already applied the PCOD. So with that, by October, say October or November, we will be applying to NHAI for literally the permission. So by January, we do expect for the fourth, the second tranche for the fourth project tender.
Okay. Okay. Second question is from the execution side, you have given a guidance of 20% growth. Do you see any risk to this from, let's say, the election sort of fund that coming in by the end of this year, the current year, in terms of approvals, and if you talked about the date coming in for the new hand to date? Do you see any risk to the execution from the elections being there in multiple places?
You see, I think we have varied upon this. The majority of execution is going to be where the appointed date is to be declared as of now, as of now. We have just INR 500 crore of HAM projects, which, whether Karnal project or Jharkhand two projects. So that is only what we have assumed. But we don't see if by December, in any case, the government would be touching, looking into the declaration of the appointed date. I don't see any challenge into it.
Okay. Just continuing this on, if I were to look into 2025, given that you have, let's say, INR 12,500 crore of books, ideally, a 20% growth can be INR 15,000 crore or INR 25,000 crore again, or is it a bit high? So-
Yeah. We do expect that whatever arrangements are being done in-house is for the CapEx, the technology, human resource, and any addition of the range of INR 8,000 crore-INR 9,000 crore be added during the year. What we, I believe, is that 20% is the ideal growth for that range of execution capital. We believe that is all doable, achievable.
Okay, understand. That's all from my side. Thank you.
Sure.
Thank you. Participants who ask a question, you may press star one. The next question is from the line of Ankita Shah, Elara Securities. Please go ahead.
Yeah. Yeah, thanks for the opportunity. I just wanted to know total you bid for INR 17,000 crore of-
Sorry? Yeah, we can hear you.
Ms. Tanvi , your audio is breaking. Please check.
Hello. Can you hear me, sir?
A bit louder, please.
I'm saying that, you know,
Sorry, your voice is breaking. Audio is not clear from your line. Request you to please re-join us.
Yes, please. Your voice is breaking. I think you are not audible at all.
Sorry, gentlemen. Ms. Tanvi , may we request that you return the question please? I'll take the next question from the line of Sarvesh Gupta from Maximal Capital. Please go ahead.
Good evening, sir, and congratulations on a good set of numbers. Sir, one thing on the Ganga Expressway, which is where, you know, a lot of your execution will be coming this year. So on the ground situation, in terms of, you know, land acquisition and other approvals for the, 80% or remaining, how are we placed? And secondly, in terms of the payments from your counterparty, how is it happening, given their own challenges that we had earlier seen?
Yeah. So in this, Ganga Expressway, unlike the other projects also, we are experienced with a good amount of land available at the day, on the day one. Almost 98% as on date is available. So that is a good part there. And we have already has set up 6 big camps, along the alignment, where, say, every one, say, 151 kilometer, is designated as a 3 project, not a single project. So that is how I think the, the, big force being required as, as far as the execution is concerned. So we're doing, touching, around INR 6 crore a day, as of now. So there's a phase of execution which we are doing. There are very few of the days where the, at least, I think, months, this, rainy season, rainy, rainy days are impacted.
As far as payment is concerned, we are getting payments right on time. There was a gap of about one or two, the initial time in March, say
So, which is a run rate which we are doing. It's almost doable.
Understood. And, secondly, sir, in terms of your cash flows. So I think we are getting around INR 500-odd crore from the sale, and, post tax, how much it will be? And then against that, again, we have to really spend INR 440 crore in the new HAM projects. And your working capital will also go up. So overall, for the year, your interest cost and debt will not sort of come down, much, right?
No, as far as the for the year 2024, the repayment of the debt is just around, say, if you see INR 350 crore of term debt. We are out of that 190 crore are including one, 190, 189 crore, which is inclusive of NCD payment, repayment. So this is would be repaid during the year only. And if you see anything which is, say, block of , INR 531 crore, this is going to be calculated. This is extra cost, what we have invested, and then, then the return, but actually the amount is being transferred to you. So this is going to be calculated. We have not calculated yet, as of now.
Ultimately, INR 440 crore, which is going to be invested into HAM, is hardly matter that, what is the tentative cash inflow for coming from HAM monetization.
Overall debt levels should remain broadly at the similar level by the end of next financial year?
No, not at all. I think it's going to be roughly come down to around, say, INR 350 crore, as was the earlier level.
Understood. What would be of your interest cost? Because your debt is much lower. What is the non-interest cost, which is included in your financial cost for FY 24?
Just a few INR crore of total cost. We are around, say, 40-50 odd INR crore of bank charges, fee, commission, etc. The remaining is the interest cost on the mobilization advance, which we have received from the client, even the OD limits and the NCD interest, and some of the total interest cost.
Understood, sir. Thank you, sir. Thank you.
Thank you.
Thank you. Our next to ask a question, you may press star then 1. The next question is from the line of Deepika from PhillipCapital . Please go ahead.
Hi, sir. Congratulations on the set of numbers. My question relates to the deal. How much inflow do we expect this year? I mean, and the deal is because for these three projects that you said would be completed. When will the first tranche be completed, and how do we expect the inflows, and in what manner?
So we will be getting the inflows, one by one. They all projects do have a different range of, say, monetization with the total enterprise value, which is looking at something low out of this debt, as you check out, with INR 531 crore is the equity realization.
Mm-hmm.
All four projects do have a different set of numbers. Once we complete conditions precedent on one project, we will be getting the amount.
So, how much... and I exist here only, and how much in the, are we expecting something in Q1?
No, Q1 is not at all possible because all NOCs are not going to happen by that time. So we would be getting, the arrangement would be done, we believe, in quarter two, say, mostly in first tranche, and then quarter three or quarter four for the second tranche.
Okay, sir. Also, sir, I want to ask, so the next quarter, quarter one, range, how do we expect us to, we are targeting a very strong number for FY 2022, which looks quite achievable also. But how do we see quarter one, especially when now it's being affected with the heavy monsoons across the different geographies in our country?
Yeah, I think in April we have experienced rains across the entire country, and most of the projects got impacted because of that execution. In March, even it got impacted; otherwise, we would lost INR 100-120 crore of execution in March as well. But, I don't see much of a challenge here. I think, we are tracking the 23% year-over, just in quarter-to-quarter; again, for last year to this year would be growing on that range.
Okay. Thank you for all the best answers.
Thank you. The next question is from the line of Shreyans Mehta from Equirus Securities. Please go ahead.
Yeah. Congratulations on a great set of numbers and for the deal. So my two questions. One, as far as the monetization is concerned, could we see some deals happening at the pre-construction stage now, given that, you know, we are getting better deals at this time?
No, it's not like that. I think, there are always, inclination from any, potential buyer to, enter into such stage. But we always believe that it is better to, initiate your discussion once we are nearing your completion. And, that is how I think 6, 7, 8 months, then we actually complete the work, and by that time, actually, technical due diligence and everything happens. So this is not the right stage, which we have not actually as of initiated and don't believe that, we are expecting for these 5 projects, which are, like, execution, that, from, March till, say, October, November, these all 5 would be completed next year, the 2024.
Mm-hmm.
The right time for that is, say, from January onward, we'd be putting on the to the market or the brands, that this is going to happen. This is, I think, whatever is important is that we're not at the pre-construction or the construction stage.
Got it. Got it. Got it. Sure. And sir, besides railways and water, are we targeting any other segment, like, say, MMLPs or roadways?
Yeah, of course, locals we are exploring. We have already had some consultants to give a brief detail inside of all these projects, where the operation and maintenance is a big number, which is going to be there. But again, our business development team is working on it, because I think Bharatmala project like Bharatmala, they have given this name. So they are exploring the possibility for at least, say, INR 300-400 crore of roadways to be awarded in next 2-3 years. So here's a real opportunity. And tunnel also, we expect that Border Roads Organisation and many of the organization, they are looking upon it. But we would be already only take on the higher projects rather in tunnel even in railway.
But we will be looking into this particular sector as well, to just tie up with any of the heavy partner.
Okay. Okay, sure. Sir, lastly, you know, I mean, just wanted to understand the secret of the margins which you are making. So we are at the higher end of, you know, what the industry is making. So sir, what gives us this confidence that we'll be able to manage, and how are we managing that, you know, in terms of the industry margins?
I think it's not very specific around. There are many areas we worked upon, and God is so kind that in last five years, once we entered into this market, we have learned a lot, we have improved upon. We always try to evolve upon any method, it can be technology, digitization, it can be human resource, Rewari package being added. So somehow those things have been arranged or being worked out in that range. So, as I already explained, that God is so kind, and we are actually in this kind of a result. But the team is quite motivated. That's more important. The team, entire team from top to bottom at the project level also has totally geared up to look into all the MIS and process controls.
They are working hard on bang on those targets, right from time to even operational efficiency. So these are all helping us. And there are, so it might be it's not that it's a total arrangement being done. So there are-
Right.
We always keep on annual operating plan to keep rolling. So we always keep on certain targets for any technology to any human resource planning and development and mentoring. So these are, I think things are happening, happening quite well, and we believe that this is a continuous process. It's not that we have achieved any, nothing, any level of it.
Got it. Got it, got it. So sir, and so lastly, if you, if I can, in terms of debtors, what could be outstanding of the total debtors, the Adani debtors, for Ganga Expressway?
Adani debtors, I already said that it is INR 270 crore-INR 290 crore, to be very specific. Out of this, we paid INR 189 crore during the month of February. And, say, this, now, May, they are, they will be paying us INR 110 crore rupees, tomorrow, on Monday. So things are, rolling.
Got it. Got it, got it. Sure, sir. Thank you, and all the best.
Thank you. The next question is from the line of Stenny, Nirmal Bang. Please go ahead.
Hi, sir. I just had a question. We have bid for INR 72,000 crore worth of identified projects. Just wanted to know what is the amount for railways and water?
For the particular year? Say, I don't get your question. Exactly?
In FY 2023, how many orders have you bid for in railways and water segment?
Okay. So in railways or metro or any of those, I think we bidded for almost, sorry, INR 9,000-odd crore, worth INR 1,000-odd crore of credit yet to be opened. Say INR 8,000 crore bid already opened, and it is metro even, the three projects we bidded. And then the water, only four projects we bidded, I think that it's from U.P., say, MP and Mysore. Very, not a very big amount, so almost INR 16-18 crore of the total project, which we bidded last year.
All right. One more question is, EPC is 20-25% of order books in terms of rails and water. Do we have any expectation or any target in terms of how many orders would we like to bid upon?
You are looking for the forthcoming year?
Yes, for FY 2024.
Yeah, sure. I think it's more important for us. We have already have arranged that the business development unit has been created, where the two experts, they are exploring the opportunity 9 each areas. So we are doing all our due diligence to bid for those projects. So with a small caution, we always look at our fixed costs and look for the margins in that. That is how I think 20-25% is not a big number, which we'll be looking upon at the total orders. By the end of 2025 or 2026, the total orders are from the beyond the highway projects.
Okay, sir. Those were the questions. Thank you.
Thank you. Next question is from the line of Jiten Rushi from Axis Capital. Please go ahead.
Thank you for the question. So the first thing you said that you have, you are planning to bid for the INR 70,000 crore railway project. So this will include station redevelopment, I think also it will be exclusively station redevelopment projects?
No, it's not that with the station projects. Of course, I think, within, say, next 3, 4, 5 months, once we have already started the design of this particular project, because there's an ongoing EPC. So once we start that, and then we will be looking at the comparison, which we are estimating at the present stage. But then again, we will start exploring. There are bids, but we will be taking a call of what, 3, 4 months, once we actually come up to the right expectations, what we have estimated and what include the time, say.
... One more thing I want to ask, like, after we had a big cut order from Adani, and, and we, like you said, that NHAI awarding was, as I say, and we could not, you know, capitalize on that. So this year, being the election year, we, we expect some sort of conduct from the January and then other state elections. So how will we—how are we targeting to recover the order? Because, uh, as you would have started there, and if you know Adani, a big part of the roads will be, uh, dampener in terms of inflows in FY23. So how do you see that? Like, if you don't get the order, then probably your guidance can, you know, and there is a delay on the time. Any thought on that?
See, already we have learned from NHAI that there are almost 2,300 kilometers of grids which they could not award in during this financial year 2029 in March. So there, the pipeline is going to be continued. We're getting from June onwards. Right now, I think there is a shuffle. And then again, like, there is again NHAI, it's an NH(O) , right now. NH, there are the projects where the huge opportunities are likely to come, where the sanctions are already at the present stage. So by January, if you see, every time it is second half of the year, there's eventually 70% of the bids or 70% of awarding being done, 70%-80%.
Now, this year, I think it will continue, continuing to be there in quarter, from quarter two to three.
Yes, then you can see that slow down now because election.
January is, I think, almost 8, 7, 8 months from now. By that time, I think that most of the bids would be awarded.
This NH(O) , what is the opportunity, NH(O) is?
It's again, like Bharatmala, like it is a National Highway Development program, NHDP. NH(O) is on the scheme of that Bharatmala, other than Bharatmala.
Last question, what was the mobilization advance as in March?
Mobilization advance? INR 360 odd crore. 360.
Okay, sir. Thanks for some answer, and all the best, sir.
Thank you.
Thank you. The next question is on the line of Shravan Shah from Dolat Capital. Please go ahead.
Sir, just to get the number right, retention money, you said 111 odd crore as on March, and mobilization advance is INR 350 crore.
See, mobilization advance is not INR 350, INR 328 to be... INR 328, no?
Fifty-eight.
358, out of which, mobilization is 304, and material advance is INR 54 crore.
Okay, okay, okay. Yeah, 359.
Correct, 359. The data is, sir. Retention and retention and material deposits, that is behind. We have already considered into debtor balance . It's total INR 80 crore, please. INR 879 crore.
Sorry, I'm slightly confused. Total debtors is INR 872 crore. Total debtor is INR 871 crore, so out of that, how much is retention money?
Out of that, 111 is retention money. Amount is also there, INR 67 crore. So with that amount, we all usually consider in the better balance, because it is a rolling amount which is being released and being deducted from most of the running bills.
Okay, okay. And, sir, what would be the CapEx for the 2024 and 2025?
So definitely, as Lee has discussed, is about the INR 100 crore we added during the year, this year. This is a net of CapEx, because actually there are few equipment which we would be selling during the year as well. This INR 30 crore, and that representation would be INR 100 crore.
Okay, got it. And, sir, any, any idea you initially mentioned in terms of the NHAI launching the second phase of Bharatmala? Any, any idea when they are likely to launch and any broader idea in terms of the size? Because Bharatmala phase one, when started with INR 600,000 crore, increased to INR 1,100,000-INR 1,200,000 crore. So any broader idea? So just to trying to understand in terms of the next 1-7 years of visibility.
No, I think it's a very unique one, but definitely the entire proposal is at the approval stage from the government. And we hear that as government is having a very priority proposal in infrastructure development, especially highways, so they would be looking into this proposal and approve this proposal by the end of this year.
Okay. Okay, thank you. Thank you, and all the best.
Thank you. The next question is from the line of Shikhar Mundra from Vibgyor . Please go ahead.
Hi, hello. I wanted to understand from the four subsidiaries which you have sold as yet, what was the equity of those subsidiaries, and what was the debt?
Equity is INR 343 crore in all four HAM SPVs.
Okay.
The debt is INR 996.
So what is the... If the whole enterprise of the whole, enterprise value of INR 1,394 crore, and what is the amount this INR 390?
It's INR 133 crore, which is a cash lying in the SPV, which has been netted off from the debt.
Okay. So this... Okay, so the debt is INR 990-
It is INR 860-odd crore and INR 531 crore.
Okay. Basically, the book value of these projects was INR 343 crore, the equity value was INR 343 crore, and we are getting an INR 551 crore equity value. Is it a separate income of basically around INR 200 crore?
It's not other income, it is a return on value. It is a valuation which we are getting. Equity, which we are interested in, invested in these four HAM projects over a period of last three and a half years.
Yeah, yeah. It's basically INR 200 crore of income which is generated by this deal.
Of course, INR 180 crore. Yeah. It's almost INR 180 crore, INR 190 crore, which is over and above the total income by 31.
Okay. All right. And what do you mean by the valuation of the deal was 1.5 price-to-book?
1.5 times... 1.5 is the valuation means, if you see to the number 531 divided by 343-
Oh, okay. Okay, got it.
1.5.
Got it. And out of these four projects, like, how many of them are completed?
All three of those projects which we are at the tranche one, we are aiming and looking for the payment to come, all completed. Fourth one, we already applied the commission, but likely within the, say, weekend days, we will be getting the completion of that. That is a provision commission. There is some work of COS and some of the work in scope, where 6%-4% will be executed within the next six months. For that, we would be looking at the second tranche of this particular Rewari Bypass project, where the payment is likely by January, we would be receiving.
Okay. And the transaction was done, as of January, right?
Of course, I think, yeah.
Thank you, Mr. Mundra. We very much happy to attend to your question. Cue for follow-up questions. Ladies and gentlemen, we'll take the last question from the line of Pushpa Gandhi from Geojit Financial Services. Please go ahead. Gandhi, your line is in talk mode. Please go ahead with your question.
Hello, can you hear me?
Yes, ma'am, we can hear you.
Yeah. So thank you for giving me the opportunity. Just a clarification on the revenue guidance that you gave for FY 2024. So you quoted a 20%-22% growth we are expecting, but if you give us the bifurcation, it's coming to approx 18%-19%. So we are expecting a revenue of INR 5,200 crore in FY 2024?
It's INR 5,200 crore, and then INR 500 crore I missed, and roughly around INR 5,500 crore, which is 23-24% of the total.
Okay. Sir, if you don't mind, can you give me the clarification again, the bifurcation again?
No, no. See, the breakup which I already have given, for the HAM project on, under execution HAM projects, new HAM projects, Ganga Expressway projects , NHAI, EPC projects. This is all together, which is coming, for the year, the FY 2024 is, roughly around INR 5,500-5,600.
Okay, sir. Thanks.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments.
Thank you. We had a successful year, and we are committed to deliver better with our dedication and hard work in the future. Our strong financial performance, diverse order book, growth, healthy balance sheet, and dedicated workforce give us the confidence that we will continue to excel. We appreciate everyone joining us today on the call and hope that we have addressed your all questions. If you have any further inquiry, query, please do not hesitate to reach us or our IR advisor, Go India Advisors. Thank you again for your participation.
Thank you. Ladies and gentlemen, on behalf of Go India Advisors, that concludes this conference. Thank you for joining us, and you can now disconnect your lines.